Microsoft's Surface Pro 2: So Right, but So Wrong

Microsoft's tablet strategy is smarter than you think, but not smart enough.

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As an avowed member of the Apple (NASDAQ:AAPL) army, I'm not supposed to say anything nice about the competition, but in some ways, I have to admit that Microsoft is way ahead of its time with its Surface line of tablets.

The reason is simple: Tablets are great for anything that doesn't require extensive typing or full desktop software.

For tasks like watching Netflix (NASDAQ:NFLX) on the couch, interacting on Facebook (NASDAQ:FB) and Twitter, and sending emails, for many people, a tablet gets the job done just fine.

And in many ways, tablets are superior to more expensive laptops due to advantages in start-up time, battery life, durability, and size/weight.

Tablets: From Consumer to Enterprise

The iPhone helped Apple sneak into the enterprise market. In 2007, I remember talking to many IT professionals who insisted that they would never support the iPhone.

But then something interesting happened: C-level executives decided they wanted to use their iPhones at work, yelled at the IT people, and voila, the invasion began.

The iPad followed along, and in October 2012, Apple CEO Tim Cook said that almost every Fortune 500 company is testing or deploying iPads.

Why?

Again -- if you're not typing a great deal or using full software applications, the iPad is the ideal portable computing device: It's cheap, fast, tough, and has great battery life.

Now I suspect there is just as much, if not more testing than deploying happening, but let's circle back to the recent iPhone 5S announcement.

The iPhone 5S' new 64-bit A7 processor shows huge advancements in speed over both last year's iPhone 5 and competing smartphones. Teh benchmarks of Anandtech.com and others show that Apple's claims of desktop-like performance are not just marketing foolery.

The PC Replacement -- With a Twist

Thirty-two bits, 64 bits, who cares? We don't need a lot of power to share photos on Instagram and send text messages.

Nonetheless, the advancement in mobile-chip development will not stop, and advanced chips will certainly be used in the next round of iPads, which will make them even more suited to replace PCs.

The future is clear: The tablet will eat the desktop PC (just the way it's eating the laptop). The tablet of the future will serve as a 24/7 portable computing hub that simply mates with monitors and keyboards as necessary. This isn't necessarily the function of some major innovation; it's basic, obvious evolution.

Document and media storage is going into the cloud while mobile devices are advancing at a rapid rate, and meanwhile, traditional desktop computers are simply old, ugly, and inelegant.

Do we really need to be dealing with this nonsense in 2013 and beyond?

Come on Apple, introduce the iPad to the Mac Mini and let them make a baby!

Microsoft Sees It

Perhaps better than any other company, Microsoft sees this future better than anyone, and that's why its Surface Pro 2 tablet runs Windows 8.1, allowing users to operate most normal desktop software. It really does cross a desktop PC with a tablet.

However...

Microsoft is making two strategic errors.

First, it is keeping Windows RT running on the Surface 2 tablet, the predecessor of which sold so poorly that it resulted in a $900 million write-down for the company. Windows RT is not compatible with the same software as Windows 8.1, and furthermore, Microsoft customers must choose between tablets that have very similar names but very different capabilities, which is just plain annoying.

And secondly, the Surface Pro 2 is far too expensive, starting at $899. There's an argument to be made that the Surface Pro 2 should command a higher price because of it's basically a full computer.

However, companies are already adapting to the iPad, which is cheaper with superior developer support. Plus, people are incredibly familiar with them. That's a tough combination to overcome.

Apple must be cut off at the pass now, but the Surface Pro 2, while ahead of its time in many ways, has an uphill battle ahead of it.

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